UK business rates need permanent change, beyond crisis
UK business rates need permanent change, beyond crisis
16 MARCH 2020 7:18 AM

Business rates are being waived during the coronavirus crisis, but they need to be reanalyzed. London’s subway prices need to be fall, too, but maybe after the virus has disappeared.

Wavering consumer confidence and its effect on hospitality and travel has forced the United Kingdom’s government to waive business rates.

“(Business rates) are taxes not on visitors but on square footage, so in my view, they should be waived. … Hotels and retail need cash, and there has been no cash for three weeks,” François Droulers, president of tourism association Confindustria Turismo Venezia and founder of DHotels, said when I spoke to him last week about the crisis’ effect on Italy.

I last spoke to Droulers for an article 14 months ago on the new tourism tax for visitors to Venice, but last week he said there is no income from this tax if there are no visitors, but business rates keep trundling on and adding up.

Also last week, the United Kingdom government unveiled its national budget for the year and said it would temporarily waive business rates for the next financial year beginning 1 April for those companies who properties have a ratable value of less than £51,000 ($63,000).

Good news, but these rates need to be revised down and permanently. Well, not down from zero, but down from their pre-coronavirus levels, which according to experts weigh down businesses and deplete High Street companies.

The government said the move would be worth approximately £1 billion ($1.23 billion), while another boon might be the offer of small business rates relief grants of £3,000 ($3,703), which the government in turn said would see a further £2 billion ($2.5 billion) shore up the economy.

None of this helps larger companies, so expect closures, layoffs and accompanying pain. It does not address the disparity many bricks-and-mortar hotels and retail establishments bear and it does not do the same to online companies often selling the very same products.

In reaction to the latest budget, the U.K.’s principal hospitality lobby organization UKHospitality stated in a news release “while easing business rates burdens and partial refunding of statutory sick pay may give smaller hospitality businesses some breathing room, it’s vital to recognize the enormous number of jobs reliant on larger operators suffering the virus’s impact equally. These businesses have today been utterly ignored at a time of business crisis. … The ridiculousness of the current system is underlined by the coronavirus situation, with punishing payments still expected of companies whose venues may not be able to open or operate.”

Underground overpriced
Something else inextricably linked with the British hospitality offering that needs to be reduced in price is transportation.

Traveling by train in the U.K. seems to me to be debilitating. Maybe it has something to do with our isles being small, and taking a train most places takes less time than it would to fly and involves less hassle?

A piece of research came my way last month from Essential Living, a London-based property developer that rents—not sells—its builds on the planet’s best and worst subway systems.

The research looks at varying aspects of life in the subway, such as accessibility, cleanliness, timeliness, all of which are important of course. But in terms of value for money, it says London comes at the very bottom.

Of 10 subway systems, London, apparently, has a monthly Underground-ticket price that is almost three times higher than the next worse in price: Tokyo.

When I buy a ticket for the separate Heathrow Express train from Paddington Station to the U.K.’s foremost airport, I always cringe, even if my kind employer is picking up the tab for my work-related expense.

That train takes 15 minutes as opposed to the hour-plus-long trip between the two on the Underground, while it is far cheaper than a traditional black cab.

That fast train to Heathrow costs £25 ($30.87) one way during busier hours, £22 ($27.17) at other times, although a return fare is £37 ($45.69), but I always think of this ticket price as being literally the first thing a visitor experiences when they arrive in Britain—and first impressions and all that.

I cringe for them paying that inflated price, too.

Yes, there are no tourists now, so perhaps there’s a chance to review pricing.

I am not holding my breath.

Email Terence Baker or find him on Twitter.

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